[Congressional Record Volume 143, Number 1 (Tuesday, January 7, 1997)]
[Extensions of Remarks]
[Pages E41-E42]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           THE INTRODUCTION OF THE POSTAL REFORM ACT OF 1997

                                 ______
                                 

                          HON. JOHN M. McHUGH

                              of new york

                    in the house of representatives

                        Tuesday, January 7, 1997

  Mr. McHUGH. Mr. Speaker, today I am reintroducing legislation to 
reform the U.S. Postal Service. The Postal Reform Act of 1997 is 
substantially identical to H.R. 3717 which I introduced in the 104th 
Congress and continues to represent the first comprehensive reform 
effort involving the U.S. Postal Service since its formation in 1970.
  When I introduced this measure in the previous Congress, I intended 
to make clear that this legislation represented the first step in a 
lengthy legislative process aimed at ensuring the future existence and 
financial viability of the United States Postal Service. The 
legislation was the subject of four extensive hearings during the 104th 
Congress and I plan to continue the hearing process into this new year. 
This legislation, as introduced, is substantially identical to the 
former H.R. 3717 as considered during the previous Congress. Any 
differences between this measure and its predecessor reflect the 
legislative reform enacted into law at the close of last year's 
legislative session. I again emphasize that the reintroduction of this 
measure represents my commitment to facilitating the reform process 
with all areas of the legislation subject to review. Consequently, I 
encourage those with interests in the legislation to continue to engage 
the Subcommittee in a constructive manner as the legislative process 
continues.
  During the 104th Congress the Subcommittee on the Postal Service, 
which I chair, conducted indepth and lengthy hearings on the U.S. 
Postal Service and the issue of postal reform. During the oversight 
phase of our hearings we heard from more than 60 witnesses representing 
all facets of the postal community. Further, I had the opportunity to 
meet with a variety of individual postal customers, postal employees, 
and business leaders regarding these matters. I attempted to listen and 
absorb the comments and interests put forth on and off the record 
during those meetings and address them with the introduction of H.R. 
3717 on June 25, 1996.
  Continuing with the Subcommittee's desire to receive the full range 
of public comments we held four hearings last year specifically on H.R. 
3717 and the issue of postal reform. Witnesses at these sessions ran 
the gamut from the Postmaster General; Chairman of the Postal Rate 
Commission; representatives of the direct mail and newspaper 
industries; private sector business partners; employee unions and 
associations, and for the first time, the Chief Executive Officers of 
the two largest private sector competitors of the USPS, Federal 
Express, and United Parcel Service.
  One thing became clear as we conducted our oversight functions and 
met with interested parties: that 26 years after the establishment of 
the United States Postal Service, postal customers across the spectrum 
want to maintain a viable universal mail delivery system. To achieve 
this goal, Congress must revisit the legislative infrastructure of the 
Postal Service to assist it in meeting the changing market conditions 
and advances in communications technology.
  Maintenance of a universal postal system must be the cornerstone of 
any postal reform measure. I strongly believe universal service at 
reasonable rates remains the primary mission of the U.S. Postal 
Service. However, shifting mail volumes and stagnant postal revenue 
growth require Congress to reexamine the statutory structure under 
which our current postal system now operates if we are to maintain this 
important public service mission.
  During the conduct of our oversight hearings, the Subcommittee heard 
many witnesses describe means of communications that were not 
imaginable in 1970. At that time, who could have foreseen the explosion 
of personal computers, the Internet and facsimile machines in our 
everyday lives? There has been a steady erosion of what used to be 
personal correspondence, protected by the postal monopoly, moving 
through the U.S. Mail that now moves electronically or via carriage by 
a number of private urgent mail carriers.

[[Page E42]]

  According to Reports of the General Accounting Office, the U.S. 
Postal Service controlled virtually all of the Express Mail market in 
the early 1970's; by 1995 its share had dropped to approximately 13 
percent. Similarly, the Postal Service is moving considerably fewer 
parcels today than 25 years ago. In 1971 the Postal Service handled 536 
million parcel pieces and enjoyed a 65 percent share of the ground 
surface delivery market. Compare this to 1990 when the Postal Service 
parcel volume had dropped to 122 million pieces with a resulting market 
share of about 6 percent.
  Even the Postal Service's ``bread and butter'' mail, first-class 
financial transactions and personal correspondence mail, is beginning 
to show the effect of electronic alternatives. Financial institutions 
are promoting computer software to consumers as a method of conducting 
their billpaying and general banking, while Internet service providers 
and online subscription services are offering consumers the ability to 
send electronic messages to anyone around the world or just around the 
corner. Similarly, many of us have become accustomed to the immediacy 
of the facsimile machine. These new communication technologies all 
carry correspondence that formerly flowed through the Postal Service. 
These former sources of revenues supported a postal infrastructure 
dedicated to the mission of universal service.
  This shift in postal revenues will have a negative long-term effect 
on the financial well being of the Postal Service. Should the Service 
continue to labor under the parameters established by the 1970 Act, its 
inability to compete, develop new products and respond to changing 
market conditions jeopardizes its future ability to provide universal 
service to the diverse geographic areas of our Nation. We must make 
adjustments to the Postal Reorganization Act of 1970 which will allow 
the Postal Service more flexibility in those areas in which it faces 
competition while assuring all postal customers of a continued 
universal mail service with the protection of reasonable rates that can 
be easily calculated and predicted. My legislation attempts to meet 
this goal by replacing the zero-sum game that has driven postal 
ratemaking for the last 25 years with a system that reflects today's 
changing communication markets.
  Mr. Speaker, I propose to allow the U.S. Postal Service the 
opportunity to make a profit and remove the break-even financial 
mandate of existing law that promotes the wide, yearly, swings of 
postal profit and deficit and weeks of negotiations on arcane economic 
assumptions for ratemaking purposes.
  I propose to divide the product offerings of the Postal Service into 
two primary categories. The first, the ``non-competitive mail'' 
category, represents all single piece letters, cards and parcels as 
well as those classes of users without significant alternatives. The 
class will utilize a postage rate ``cap'' process by which the 
associated customers can easily determine postal rates. The second 
category will be the ``competitive mail'' category and will include 
those mail classes, products and services the Postal Service provides 
through the competitive marketplace. Within the category the Postal 
Service may set its rates according to market forces subject to an 
annual audit provided to the Postal Rate Commission to assure that 
rates are reflective of costs while providing a contribution to the 
overhead of the U.S. Postal Service. In addition, it would allow the 
Postal Service freedom to experiment with new offerings for a period of 
three years before requiring the Postal Rate Commission to permanently 
place it in either the competitive or non-competitive mail categories.
  This legislation grants significant freedom and flexibility to the 
Postal Service. Consequently, other changes are needed to reflect this 
status. I propose to attempt to level the playing field by changing the 
relationship between the U.S. Postal Service and the U.S. Treasury. 
Several postal competitors view financial access to the Treasury as an 
unfair advantage of the Postal Service, while the Postal Service views 
it as a restriction on its financial flexibility. Similarly, I propose 
to apply the anti-trust laws of our nation to the Postal Service 
products offered in either the competitive mail or the experimental 
market test categories. I am also proposing that the Postal Service 
conduct a demonstration project that will provide us with the data 
needed to determine the continued necessity of providing the Postal 
Service with sole access to individual private mailboxes.
  Mr. Speaker, last Congress when I introduced my bill I included a 
provision intended to settle once and for all the nagging problem of an 
agency's chief law enforcement officer and member of postal management 
serving as its Inspector General by establishing an independent 
Inspector General for the Postal Service. A provision of Public Law 
104-208, adopted in the closing days of the 104th Congress, addressed 
that issue by mandating the establishment of an independent office of 
the Inspector General. The Subcommittee is monitoring the progress of 
this office and has high expectations for this new Inspector General.
  Also, the bill directs stringent reporting requirements to the 
Congress and to the U.S. Postal Rate Commission by providing the 
Commission with the ability to issue subpoenas, manage proprietary 
documentation and procure necessary information. This legislation 
places significant responsibilities on the Commission and, reflective 
of that, directs that the Commission will have for the first time its 
own Inspector General.
  My proposal, Mr. Speaker, also increases the penalties for repeated 
mailings of unsolicited sexually oriented advertising as well as the 
mailing of hazardous materials and controlled substances. It protects 
workers on the job by making it a felony to stalk, assault or rob a 
postal employee. Just this past month we saw a letter carrier killed 
while on duty in our nation's capital and we cannot allow those that 
would harm or rob postal carriers to go without significant punishment. 
My proposal addresses this serious situation by increasing the 
penalties for such acts of violence.
  I stress that significant areas of current law remain intact. This 
legislation does not affect the existing collective-bargaining process. 
However, the Subcommittee recognizes that serious problems exist 
between postal management and labor. To address this dire situation, I 
propose to form a Presidentially appointed Commission made up of non-
postal union and corporate representatives as well as those well known 
in the field of labor-management relations. The Commission would be 
charged with addressing these issues in detail and provide guidance to 
the Congress and the Postal Service on any needed changes.
  Mr. Speaker, this bill is, indeed, far-reaching in its scope. Some 
have said there is no consensus for reform while others have requested 
reform, due to the fact that the USPS has had two years of financial 
success and high delivery satisfaction numbers. My response is that 
this is precisely the time to consider this issue.
  Reforms of this scope and magnitude are best enacted outside an 
atmosphere of crisis. Our failure to consider these reforms in a timely 
manner will leave the Postal Service ill-equipped to operate in a 21st 
Century environment. Without such action, Congress and the Postal 
Service will ultimately face conditions where thoughtful reforms and a 
deliberative process will be unachievable.
  Mr. Speaker, my bill offers the Postal Service, its customers and 
employees--and the American people--the opportunity to equip one of our 
Nation's most valued institutions with the requisite tools to remain a 
viable and fiscally sound entity well into the next century.

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